How Silicon Valley Could Destabilize The Democratic Party

Much has been written, often with considerable glee, about the worsening divide in the Republican Party between its corporate and Tea Party wings. Yet Democrats may soon face their own schism as a result of the growing power in the party of high-tech business interests.

Gaining the support of tech moguls is a huge win for the Democrats — at least initially. They are not only a huge source of money, they also can provide critical expertise that the Republicans have been far slower to employ. There have always been affluent individuals who backed liberal or Democratic causes, either out of conviction or self-interest, but the tech moguls may be the first large capitalist constituency outside Hollywood to identify almost entirely with the progressives.

This alliance of high tech and Democrats is relatively new. In the 1970s and 1980s the politics of Silicon Valley’s leaders tended more to middle-of-the-road Republican. But the new generation oligarchs are very different from the traditional “propeller heads” who once populated the Valley. More media savvy and less dependent on manufacturing, the new leaders have less interest in the kind of infrastructure and business policies generally favored by more traditional businesses. They also tend to have progressive views on gay marriage and climate change that align with the gospel of the Obama Democratic Party.

In the process, the Bay Area, particularly the Silicon Valley - San Francisco corridor, has become one of the most solidly liberal regions in the country. The leading tech companies, mostly based in the area, send over four-fifths of their contributions to Democratic candidates.

The tech oligarchs are also poised to reinforce the media dominance enjoyed by the Democrats. Over the past two years we have seen one tech entrepreneur and Obama ally, Chris Hughes, take over the venerable New Republic, while another, Amazon’s Jeff Bezos, bought the Washington Post.More important, pro-Democratic tech firms such as Microsoft, Yahoo and Google now dominate the online news business, while others, such as Netflix and Amazon, are moving aggressively into music, film and television.

Yet for all the advantages of this burgeoning alliance with tech interests, it threatens to create tensions with the party’s traditional base — minorities, labor unions and the public sector — as the party tries accommodate a constituency that combines social liberalism and environmentalist sentiments withvaguely libertarian instincts. The fact that this industry has a pretty awful record on labor and equity issues is something that could prove inconvenient to Democrats seeking to adopt class warfare as their primary tactic.

Indeed, despite its counter-cultural trappings and fashionably progressive leanings, Silicon Valley has turned out to be every bit as cutthroat and greedy as any gaggle of capitalists. Leftist journalists like John Judis may rethink their support for the Valley agenda once they realize that they have become poster children for overweening elite power and outrageous inequality.

Privacy is one issue that should divide liberals from the tech oligarchs. Historically liberals have been on the front line of the battle to protect personal information. But now tech interests have worked hard, with considerable Democratic support, to block privacy protections that would damage their profits in Europe, and closer to home.

Another inevitable flashpoint regards unions, a core progressive constituency. Venture capitalist Mark Andreesen recently declared that “there doesn’t seem to be a role” for unions in the modern economy because people are “marketing themselves and their skills.” Amazon has battled unions not only in the United States, but in more union-friendly Europe as well.

Avatars of equality? Valley boosters speak of the “glorious cocktail of prosperity” they have concocted, but have been very slow to address, or even seek to ameliorate, the vast social chasm that exists under their feet.

Many core employees at firms like Facebook and Google enjoy gourmet meals, childcare services, even complimentary house-cleaning in an effort to create, as one Google executive put it, “the happiest most productive workplace in the world.” Yet the reality is less pleasant for other workers in customer support or retail, like the Apple stores, and even more so for contracted laborers in security, maintenance and food service jobs.

Indeed over the past decade the Valley itself has grown almost entirely in ways that have benefited the affluent, largely white and Asian professional population. Large tech firms are notoriously skittish about revealing their diversity data, but one recent report found the share of Hispanics and African-Americans, already far below their percentage in the population, declined in the last decade; Hispanics, roughly one quarter of the local workforce, held 5.2% of the jobs at 10 of the Valley’s largest companies in 2008, down from 6.8% in 1999, according to the San Jose Mercury News. The share of women in management also has declined, despite the headlines generated by the rise of high-profile figures like Yahoo’s Marissa Mayer and Facebook’s Sheryl Sandberg.

The mostly male white and Asian top geeks in Palo Alto or San Francisco should celebrate their IPO windfalls, but wages for the region’s African-Americans and Latinos, roughly a third of the local population, have dropped, down 18% for blacks and 5% for Latinos between 2009 and 2011, according to a 2013 Joint Venture Silicon Valley report. Indeed as the Valley has de-industrialized, losing over 80,000 jobs in manufacturing since 2000, some parts of the Valley, notably San Jose, where manufacturing firms were clustered, look more like a Rust Belt city than an exemplar of tech prosperity.

Overall, most new jobs in the Valley pay less than $50,000 annually, according to an analysis by the liberal Center for American Progress, far below what is needed to live a decent life in this ultra-high cost area. Part-time security workers often have no health or retirement benefits, no paid sick leave and no vacation. Much the same applies to janitors, who clean up behind the tech elites.

The poverty rate in Santa Clara County has climbed from 8% in 2001 to 14%, despite the current tech boom; today one out of four people in the San Jose area is underemployed, up from 5% a decade ago. The food stamp population in Santa Clara County has mushroomed from 25,000 a decade ago to almost 125,000. San Jose is also home to the largest homeless camp in the continental U.S., known as “the Jungle.” As Russell Hancock, president of Joint Venture Silicon Valley, admitted: “Silicon Valley is two valleys. There is a valley of haves, and a valley of have-nots.”

These realities suggest that the tech oligarchs, despite their liberal social views, are creating an environment for the “one percent” every bit as stratified as that associated with Wall Street. Google maintains a fleet of private jets at San Jose airport, making enough of a racket to become a nuisance to their working-class neighbors. Google executives tout its green agenda but have burned the equivalent of upwards of tens of millions of gallons of crude oil, which seems somewhat less than consistent.

At the same time, the moguls have a record of tax evasion — a persistent progressive issue — that would turn castigated plutocrats like Mitt Romney green with envy. Individuals like Bill Gates have voiced public support for higher taxes on the rich, yet Microsoft, Facebook and Apple have all saved billions by exploiting the tax code to shelter profits offshore. Twitter’s founders creatively exploited various arcane loopholes to avoid paying taxes on some of the proceeds of their IPO that they set aside for heirs.

The set of differing rules for oligarchs and everyone else extends even to the most personal issues. Yahoo’s Mayer, a former Google executive, banned telecommuting for employees — particularly critical for those unable to house their families anywhere close to ultra-pricey Palo Alto. Yet Mayer, herself pregnant at the time, saw no contradiction in building a nursery in her own office.

This model of economic development seems it would be more appealing to those who believe in “the survival of the fittest” than people with more traditional liberal values. The alliance with tech may well be a critical boon to the progressive cause and its champions for the time being, but at some time even the most deluded progressives will begin to realize with whom they have chosen to share their bed.

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While I generally concur with many of Mr Kotkin's points (though I do question why any company earning profits abroad should be subject to US taxation on those profits when most countries do not tax overseas earnings), singling out the tech industry is leaving out other industries and professions equally deserving of the same critique - notably law, finance, entertainment, media and academia.

People working in this elite professions do appear to be willing to a premium in taxes and housing costs so as to live in an environment that mostly drives the working class (increasingly minority) out. They may recognize that they new a few tradesmen around for remodels, and upscale restaurants or stores may require staff, and offices need to be cleaned, and they may think these people should earn a bit more, but they really don't want too many of them around. The policies they advocate appear to be accomplishing just that.

California is quite large and per the BLS now has the highest poverty rate in the country, concentrated in the inland regions of the state. However, it is disproportionately the lower classes that are leaving the state. Again, these are often minorities. This almost seems the intent.

One of the big ironies of all this, is that the political lefty- liberals have generally claimed to dislike "exclusionary suburbs", when what they really dislike is "choice", and the choices people make when they have a choice between competing local jurisdictions. But the elite people themselves like the choice of an exclusionary suburb, and increasingly, whole cities that are exclusionary.

But the political lefty-liberals who claim to care about exclusion, always seem to have no problem with highly centralised planning that makes everybody worse off, the poor and less skilled most of all. If they could apply something like Agenda 21/Smart Growth/"Compact City" mandates to the entire USA, you bet they would.

The resulting impact on "everyone" can be seen in the UK. where they have relentlessly similar policies in all cities. They have a crisis at breaking point right now. At least the USA still has inter-jurisdictional competition at the State and city level. The British have no Texas to flee to. All they can do is try and squeeze in to some illegal "accommodation" in London for which they have to pay through the nose, and try and grab some of the crumbs that trickle down from the global finance, bureaucracy and media sectors that are now pretty much all the entire UK economy has still got going for it.

".....Yet for all the advantages of this burgeoning alliance with tech interests, it threatens to create tensions with the party’s traditional base — minorities, labor unions and the public sector....."

Minorities and labour were betrayed by the Dems long ago, with elitist urban planning, Agenda 21, and a disgracefully cosy relationship with the entire "big rentier" class in property and finance. But like a mistress who enjoys abuse, they remain loyal to the Democrats.

And the Republicans get judged as if they are the party of "big" this and that? Maybe they are the party of the "big" honest main street producer, and good for them. But main street producers and entrepreneurs operating in free markets, lift all boats. It is the cronies who are the Dems mates, who "get richer while the poor get poorer".

As for bureaucrats - they are now literally another parasitical rentier class along with lawyers and consultants and lobbyists. It would be nice if the Silicon Valley moguls "vaguely libertarian" instincts eventually caused them to turn against a Democrat Party that absolutely will not abandon its Public Service Union cronies for anything. I can't see the libertarian instincts prevailing in the Democrat Party.

There is a music video on YouTube that is quite popular, where the chorus goes "B**ger the bankers and politicians, B**ger the bureaucrats too....."

I find the inclusion of the bureaucrats in this new-populist refrain very encouraging. People might be waking up.

Henry George lamented way back in the 1800's, how the political representatives of "labor" expended all their efforts going after the employer class, when the real problem was the rentier class in property and finance. Nothing has changed. "The poor" and "the workers" and "minorities" still vote Democrat, and the top 1 percent's rate of amassing the lion's share of national wealth has risen faster than ever since the Saviour Barack was elected.

The Democrats have long been the party of crony capitalism, and that's what's happening with Silicon Valley. Not that the Republicans have clean hands, but at least there's strong opposition to cronyism from some quarters (e.g., the Tea Party).

“…….On environmental questions, the ideological imbalance is even more pronounced. In their eye-opening appendices—these alone are worth the price of the book— Horowitz and Laksin list no fewer than 552 groups promoting greater government control over the environment with annual revenue of $3.56 billion, compared to a mere 32 groups emphasizing private property and free-market solutions to environmental problems bringing in $96 million per year—an imbalance of over 37 to 1 in favor of the left. In both of these areas, the left’s resource advantage is compounded many times over when government funding is added to the mix, which flows disproportionately to progressive groups even under conservative presidential administrations.

Horowitz and Laksin conclude The New Leviathan by noting that progressives pose as “noble advocates of the underdog, ‘speaking truth to power,’ selflessly standing up for the economically disadvantaged and the politically disenfranchised,” when in truth they “have operated as a moneyed elite, deploying the war chests of billionaires . . . to increase their power and expand the role of the state with negative consequences for working Americans and the poor.”………”

Hmmm, now why might wealthy capitalists be so lavishly funding activism for “greater government control over the environment”……..?